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2022 (4) TMI 994 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Service of demand notice - statutory notice issued under Form -3 has been served without any annexures as mandated under the code - existence of debt and dispute or not - debt is more than or equal to the threshold limit under section 4 or not. Service of Demand Notice - HELD THAT - The demand notice has been received by the corporate debtor is also not in doubt, as there is a reply by him to the subject notice on 24.01.19, acknowledging the receipt of the notice on 12.01.2019, albeit it is not an acceptance of the amount claimed but points out a deficiency in the claimed amount vis- -vis the invoices attached - The invoice which is said to be in default as attached with the notice under section 8 bears the no. BBRNKR/00212/12-13 dated 19.02.2013 and is amounting to ₹ 1,02,236/-, while the other invoice bearing no. BBRNKR/0057/17-18 dated 30.06.2017 for ₹ 525/-. However, the total of these two invoices works out to ₹ 102761/- only as against the claimed amount of ₹ 3,99,034.52 in Part IV of the Application in Form -5. Notwithstanding the difference in the amount claimed thus, the notice has been sent and received by the corporate debtor. Pre-existing dispute or not - HELD THAT - There is virtually no correspondence from both sides that could throw some light on the issue of pre-existing dispute vis- -vis raising of a claim or even asking for payment by the operational creditor - Given the law laid down by Hon'ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT the court held that mere 'existence of a dispute' is not enough and the Court has defined a 'genuine dispute' as bona fide and truly existing before the receipt of the demand notice/invoice, as the case may be, and that the grounds of its existence must be real and such conflict of claims or rights should be apparent from the reply to Demand Notice as contemplated by Section 8(2) of the Code. This not being so in the instant case, no ground of pre-existing dispute has been made out by the corporate debtor, as the Corporate Debtor disputed it for the first time through the reply to the demand notice dated 24.01.2019 which was after the prescribed 10 days period. As such, there is prima facie no existence of a pre-existing dispute. Whether the operational debt is due and payable? - HELD THAT - There is nothing on record to show that the operational creditor had also been systematic and persuasive in asking for payment of its outstanding claim and has chosen to file the application without any in-house reconciliation and has chosen to casually include the oldest and the latest invoice in the demand notice in Form 3 of Rule 5. Whereas there is no provision for the payment of interest included either on the invoices or even in the agreement, the same has been claimed @18% impromptu without any basis - here is a case wherein the allegedly unpaid invoice already stands paid in the records of the Operational creditor himself, charging of the interest where no provision exists and all this being bereft of any worthwhile documentation Such matters serve as poor examples of the treatment of the IBC as an ad-hoc recovery mechanism and that too without adducing any substantive logic and fulfillment of the necessary documentation as required by the code provisions. The instant petition made by the Operational Creditor under Section 9 of the Code, seeking initiation of CIRP in respect of the corporate debtor, is rejected on the grounds of failure to produce the proof as required under Section 9(2)(e) - petition dismissed.
Issues:
Petition under section 9 of the Insolvency and Bankruptcy Code, 2016 by an operational creditor against a corporate debtor for initiation of Corporate Insolvency Resolution Process (CIRP) and appointment of Interim Resolution Professional (IRP). Analysis: 1. Service of Demand Notice: The demand notice was duly issued on 07.01.2019 and received by the corporate debtor, as evidenced by the reply on 24.01.19, although not accepting the full claimed amount. The notice included invoices, establishing service of demand notice. 2. Pre-existing Dispute: The corporate debtor raised discrepancies in the claimed amount post receiving the notice. However, the lack of evidence of a pre-existing dispute and delayed dispute raised by the corporate debtor do not meet the criteria of a genuine dispute as per legal standards. 3. Operational Debt Due and Payable: The operational creditor failed to substantiate the outstanding debt adequately. The ledger account provided did not align invoices with payments, indicating lack of clarity. Moreover, interest was claimed without a contractual basis, and the petition lacked necessary documentation and logical substantiation. The judgment rejected the petition under Section 9 of the Code due to the operational creditor's failure to provide sufficient proof as required by Section 9(2)(e). The decision highlighted the inadequacies in documentation, lack of substantive logic, and misuse of the Insolvency and Bankruptcy Code as an ad-hoc recovery mechanism. The order directed communication to all relevant parties and emphasized compliance with formalities for issuing a certified copy upon request.
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